Ladies and gentlemen, Equities Limited. Good day and welcome to Marksans Pharma Q2 FY27 earning conference call hosted by Systematix Institutional As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touchtone phone. Please note that this conference is being recorded. And now hand the conference over to Mr. Vishal Manchanda. From Institutional Equities Limited. Thank you, and over to you, Mr. Manchanda. Thanks, Siddhant. On behalf of Systematix Institutional Equities, I welcome you to the Q2 FY27 earnings call of Marksans Pharma. We thank the Marksans Pharma management for giving us an opportunity to host the call. Today we have with us the senior management of the company represented by Mr. Mark Saldanha, Chairman and Managing Director, and Mr. Jitendra Sharma, Chief Financial Officer. I'll now hand over the call to the company management for opening remarks. Over to you, sir. Thank you, Vishal. Good afternoon, ladies and gentlemen. Thank you for joining us for Marksans Pharma Q2 and H1 FY27 earning conference call. We appreciate your continued interest in the company and your support. I'm pleased to share that we have delivered our strongest quarterly performance. Q2 was a record quarter for us with the revenue from operation reaching ₹940 crores. Representing a year-on-year growth of 30.5%. More importantly, this growth was accompanied by strong improvement in profitability. EBITDA increased by 48.3% to ₹214 crores. And our EBITDA margin expanded by 274 basis points to 22.8%. What is particularly encouraging is the breadth and quality of this performance. Our growth is not dependent on a single geography or acquisition. We have seen strong moment— momentum across Europe, UK, and continue to grow in North America, and the increasing traction in Australia and New Zealand helped us to achieve these numbers. Even excluding the contribution from Clinique, underlying business delivered a growth of approximately 25%. At the same time, we maintained a healthy profitability despite higher freight and input costs. This gives us confidence that the investment we made in our portfolio, commercial capabilities, and geographic expansions are translating into sustainable growth. Our performance also demonstrates the strength of our geographically diversified business model. North America continues to provide us with a large and resilient base. While UK, Europe, and Australia and New Zealand are emerging as increasingly meaningful growth engines. The diversification provides us with multiple avenues of growth and reduces our dependency on a single market. Let me begin with UK and Europe. We have seen a particularly strong performance. Revenue from this region increased by 65% to approximately ₹405 crores. As many of you can recall, FY26 was a relatively subdued year for our UK business. We used this period to work on fundamentals, strengthen our portfolio, preparing new product launches, and improving our market position. These efforts are now beginning to reflect in our performance. Even excluding the performance, uh, the contribution from the acquisitions, our business in the region grew by 49% in Q2. Alongside the growth in our existing business, we are making progress in important strategic priorities. Building our own commercial infrastructure in key urban markets. This will bring us closer to customers and give us better control on how we take our portfolio to the market. Clinique in Netherlands contributed approximately ₹84 crores for the first half. While ABC and Marksans GmbH are strengthening our platform in Germany. These businesses are important building blocks of our Europe— European strategy. And over time should increase the opportunity to introduce a wider portfolio and scale up presence across the region. Turning to North America. which remains our largest market and contributed 48.44.8% of the revenue, we recorded our highest ever quarterly revenue of ₹421 crores. Representing a growth of 8.7% year on year. This is encouraging performance in context of the economic environment in the US market. Our order book remains healthy and continues to build, giving us confidence that as we look ahead in the coming quarters, price erosion in our prescription products although being in single digits, we are still looking extremely optimistic in the US market. In Australia and New Zealand, revenue grew by 64%. approximately ₹101 crore. We are seeing good traction from the strategy we pursued to build branded prescription business under Nova. Our Rx division is growing at a strong pace, and the growth we are now delivering in these markets is meaningfully ahead of the levels achieved in the previous year. We are encouraged by this progress and remain positive about the opportunities ahead. Our rest of the world business remained impacted in the quarter by ongoing geopolitical distributions in the Middle East and other regions, which affected the timing of certain shipments in the region. Importantly, this was largely an operational and timing-related impact rather than a change in underlying opportunities in these markets. We continue to monitor the situation closely, and as the condition normalizes, expect shipments activities to recover progressively. As we look into the second half and beyond, our growth priorities remain clear. We will continue to deepen our presence in the existing market, scale our new established European platform, expand our product portfolio, and selectively enter markets where we see an attractive opportunity. A healthy order book, expanding commercial capabilities, and strong financial position gives us confidence in our ability to sustain profitable growth. Importantly, we are pursuing these opportunities from a position of financial strength. Our strong cash generation and a net cash balance provide us the flexibility to continue to invest in our product pipeline and commercial capabilities while selectively evaluating acquisitions that offer a compelling strategic and financial fit. We remain disciplined in capital allocation, focused on execution, and committed to creating sustainable long-term value. With this, I hand over to Jitendra to take you through the financial performance. Thank you, sir, and good afternoon, everyone. I will take you through the financial performance for the 2nd quarter, followed by the first half performance. Starting with Q2, total income stood at ₹958 crores, registering year-on-year growth of 29.2%. Revenue from was ₹940 crore, up 30.5% year-on-year and 11.8% sequentially. Looking at the geographic mix, North America contributed ₹421 crores, representing 44.8% of the revenue. UK and Europe contributed ₹405 crores. Or 43%. The Australia and New Zealand contributed ₹101 crore or 10.7%, while the rest of the world contributed ₹40 crore or 1.5%. Gross profit increased year-on-year by 33.6% to ₹550 crores ahead of revenue growth. Gross margin improved by 135 basis points. Year-on-year 58.5%. EBITDA increased year-on-year by 48.3%. Operation. Hello. Hello, there was some sort of disturbance from the line of Mr. CFO. Just a moment. आह मैं श्री जीतेंद्रा या या क्या बात है ना या शॉर्ट थैंक यू ग्रॉस प्रॉफिट इंक्रीज ईयर ऑन ईयर 550 बाय 33.6 करोड़ परसेंट तू रुपीस आयड ऑफ़ रिवेन्यू ग्रोथ, ब्रास मार्जिन इम्प्रूव्ड पर 135 बेसिस पॉइंट पर ऑन ईयर 58.5 परसेंट। EBITDA increased year-on-year by 48.3% to ₹214 crore, with EBITDA margin expanding by 274 basis points to 22.8%. Ahead of our 20-21% guidance range. During Q1, we benefited from consumption of lower-cost inventory. However, we are now seeing increase of inventory costs resulted in gross margin moving to 58.5% from 59.1% in the previous quarter. Notably, freight costs have nearly doubled in the current environment. Higher freight contribution approximately ₹20 crore to the sequential increase in the other expenses. There has been a slight increase in the employee cost also by approximately ₹8 crores. As we continue to strengthen our team and invest in the newer markets. In addition, our German business incurred initial startup costs of a couple of crores as we prepare these operations for the next phase. Against this backdrop, delivering a record quarterly EBITDA and maintaining an EBITDA margin of 22.8% is particularly encouraging. It reflects the operating leverage in our business and improving product and geographies mix. and disciplined execution across our markets. Profit before tax for the quarter was ₹194 crore, up 45.1% year on year. Profit after tax increased by 44.8% to ₹144 crore with a net margin of 15%. Profit after tax declined sequentially to ₹144 crore. ₹144 crore compared with ₹159 crore in Q1. Primarily due to higher depreciation and amortization following the commencement of amortization on acquisition-related intangible assets, lower other income as currency movements stabilized and a higher effective tax rate of 25.8%. Moving to the first half performance, total income stood at ₹1,825 crore. Up 33.4%, while revenue from operations increased by 32.9% to ₹1,781 crore. Gross margin improved by 137 basis points to 58.8%. Supported in part by the lower average cost of inventory consumed, particularly, particularly during Q1. EBITDA grew by 74.7% to ₹427 crore. With the margin expanding by 574 basis points to 24%. Profit after tax increased by 92.5% to ₹303 crore. With a net margin of 16.6%. The first half PAT also benefited from the higher other income. Cash generation was another important highlight of the first half. Cash generated from operations was at ₹322 crore compared with ₹75 crore in the corresponding period last year. Cash conversion measured as operating cash flow as a percentage of EBITDA improved to 75.2% from 30.7%. After capital expenditure of ₹46 crores, free cash flows to debt ₹275 crores. We also continued to make progress in working capital management. The working capital cycle reduced to approximately 128 days in first half of the year from 138 days in FY26. During H1, we deployed around ₹95 crore towards acquisitions. and paid dividend of around ₹41 crores. Even after these outflows, our net cash position increased by ₹135 crore during the period. As at September end, cash balance and current investments stood at ₹1,124 crores. Our net cash position was therefore at ₹1,095 crore. While net worth stood at ₹3,367 crores. Our return ratios have also improved meaningfully. On a trailing 12-month basis, return on capital employed increased to 24.7% from 18.7%. While return on equity improved to 18.6% from 13.6%. For H1, R&D expenditure was 2.6% of revenue. To conclude, the first half reflected strong growth in revenue and profitability, healthy cash conversion, and continued improvement in capital efficiency. Thank you. We will now be happy to take your questions. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question, ladies and gentlemen. We will wait for a moment while the question queue assembles. The first question comes from the line of Ahmed Mada from Unifi Capital. Please go ahead. Yeah, thanks for the opportunity and congratulations on a very good set of numbers and executions. Firstly, on the US side, if you look at the growth in terms of constant currency terms, it is relatively low in the first half. How should one think about it in terms of, uh, being able to penetrate into more volumes, uh, in the second half? And in general, how does the order book look like? There were some comments on the consumer sentiment in US. How do you see the market and growth in the second half and in general for the US business? Obviously seasonality being number one, a substantial amount of our portfolio is seasonal, which is obviously more tilting towards a cold season. The cold season has yet to— they normally, normally comes in October, November, December, uh, is, is the season. Um, that said and done, obviously when we talk of sentiments, we talk about the geopolitical scenarios where we talk of inflation, crude oil, everything of that stuff, uh, having, um, impact on affordability, uh, in the US, obviously. Cost going up, I think medicines are literally the last priority on everyone's mind. Um, you know, obviously food and gas becomes the top priority for everyone else. So, uh, all this coupled with seasonality, so, uh, I mean, we have grown to some extent and we will continue growing in the US market. We are quite optimistic on achieving our objectives. We still believe within the next 3 years, we should reach $300 million order book status with regards to the US. So we are still very optimistic where US is concerned. The overall run rate is now close to almost ₹1,000 crores. Probably next quarter or so you reach there. So in terms of organic capacity expansion Uh, how do you think about it? Obviously we have a lot of cash available, uh, so do we go into a major CapEx cycle next year or so? So, um, again, like I've said, our outlook is more longer than with immediate outlook. So we do believe we are trending and we are working— we are working and trending towards achieving, um, ₹5,000 crores in the next 3 years and possibly doubling our revenue from where we were last year within the next 5 years. 6,000 odd crores. So we are working towards that, and that would need obviously infusion of CapEx in terms of manufacturing infrastructure to support that growth phase. Today, you're right, uh, we are trending at ₹1,000 crores a quarter, very close to ₹1,000 crores, but you can round it off ₹2,000 crores a quarter. Uh, that, that gives us some visibility on the ₹4,000 crore mark. Um, so today we don't talk about ₹4,000 crores, we are already planning for ₹5,000 crores, and for that we are we are looking at opportunities in terms of expanding our infrastructure. It may be, you know, adding on another manufacturing block or acquiring another plant. We have an active dialogue on both sides. Okay, got it. Thank you so much. Thank you. Thank you. The next question comes from the line of Arun from Unifi Capital. Please go ahead. Uh, so congratulations on the good set of numbers. Uh, could you explain how revenue growth looks in the other regions, particularly the UK? With the UK slow base from last year's price war ending from Q4, what growth do you expect expect there, uh, at the overall level? How does, uh, can you, can you brief on that? Do you, do we do so? So UK, uh, UK looks very promising, uh, and I must say it has overcome last year's slow revenue stream. We have introduced newer products, newer launches, pretty much like I've always said, Um, you, you've got to just wait for the business model sometimes to unfold. We had a lot of products in the pipeline. We have a lot of products under filing, uh, under registration, and under approval. So as and when these approvals do happen, and we are expecting quite a few approvals every quarter, they will unfold revenue streams. New revenue streams, new penetration of these molecules into the market. So UK is looking promising, but also Europe, because we are now looking at Europe both from a geography as well as from an expansion of our IPs that we have created. So we are exhaustively looking at creating those infrastructures to market our products across Europe. And, and we have seen some good results, although it's just a start. It's been a couple of months since we are into Europe, but, but it's looking extremely promising. So if you, if you ask me my outlook of UK and Europe, they will still continue to grow, uh, to grow over the next couple of years and will be very important geographies to hit our objectives of our 6,000 crores. Got it, sir. And historically, uh, H2 PAT has been higher than H1, and given that, uh, the importance of Q3, uh, for our products, do you expect that trend to continue this year? Will H2 PAT be higher than, uh, H1, given that H1 has already benefited from the lower cost inventory and forex gains? Yeah, it's a very good question. Like you rightly said, the H1, uh, the first quarter obviously benefited from a lot of low-cost goods, uh, while, uh, while because of the crude oil and because of everything, the cost has gone up. Um, and while we keep depleting our stocks, we have to basically purchase new inventory. We, we believe we'll be range-bound. Overall for the year. Like I've always committed, I think our performance in revenue is— it will keep growing, and I'm quite confident of us hitting objectives and I think our EBITDA should be pretty much in the range bound of, uh, you know, 21-22%, whatever we performed this year, this quarter. So I do see our overall EBITDA being in that same range. The PAT— with regards to PAT, I, I think, uh, you know, besides provisions of different taxations and depreciations, I think our PAT will be pretty much in line with what is expected. Got it. Yeah, thanks. Yeah, that's it from my side. Thank you. The next question comes from the line of Saksham Tiagi from Deswal Aardvark Advisory. Please go ahead. Hello, am I audible? Yes. Okay, so first of all, thanks for the opportunity, sir. Uh, my first question is that, like, in the investor presentation, you have mentioned Europe to be the key growth driver in the upcoming quarters. So I just wanted an insight on that, like how is it going to be the key growth driver in the upcoming quarters? Um, because, uh, it has— it's got a very low base today and we are working hard in basically generating revenue. So these all are going to add to both our revenue streams, which was not factored over last year. So definitely it is, uh, adding, uh, to, uh, being a growth driver presently. So we are literally starting from zero where Europe is concerned. Okay, so I do see Europe over the next 3 years shaping up very well, being a very prominent player, prominent contributor to our overall scheme of our objectives, like I mentioned, uh, to the previous, uh, to Arun previously. Okay, so it might take up to 3 years to see the visible changes, right? Well, it's— we already seen some changes. Uh, they may be small today, but they will grow every year. And we do see growth happening in ABC now. We do see growth happening in Uh, what, uh, even in the clinic, uh, a Netherlands company. So, and then we have— we are looking and exploring on more M&As in Europe, and we do hope to conclude a couple of them. Down the line, hopefully within the next 12 months. Okay, sir, understood. And so my next question is on the expansion side. Uh, since we are aiming to expand the ABM capacity to 16 billion units per annum, so I just wanted to know how are we going to achieve that and how much time is it going to take? So, uh, I think expansion will, will happen in twofolds. One is, uh, within our facility, uh, within our infrastructure that we have within the Teva plant. We are planning to add in a couple of blocks to expand dosage forms as well as some capacity debottlenecking. But we are also looking at expanding or acquiring a plant which will give us more of which basically fuel more potential of revenue as well as volumes, which is needed. So we are basically in dialogue with 2 companies today, but nothing concrete, but we are looking at basically expanding our manufacturing capabilities, hopefully, maybe for which we probably need a year down the line or so. Immediate effect, but maybe a year, year and a half down the line. Okay, so is there any expected timeline for that? I would, I would probably put 12 months. Okay, sir. And lastly, uh, I wanted to know that since you have acquired 100% stake in Excel Healthcare in Dubai, so can you give some colors on that? Like, how is it going and what would be the contribution? And also, I wanted to know if there are any acquisitions lined up in the UAE region. Uh, presently we are looking at the geopolitical scenario. There is no M&A acquisitions planned in the Middle East. Um, I think, uh, Access Healthcare is holding its own right now, uh, taking into consideration all that it's been through for the one, uh, for the full year. So the war has impacted the Middle East, but we are still very profitable. It's still generating enough of cash, although the revenue is extremely small in the overall context of our turnover. But it is, uh, it is, uh, we are working, uh, even in this scenario, we are working on increasing our pipeline by tenfolds. So we are busy working on filing products and trying to grow that basket as early as possible. Okay, sir, I understand. Thank you very much and all the best for the upcoming quarter. Thank you. The next question comes from the line of Meet Vora from Integrity Ventures and Partnerships. Please go ahead. Yeah, uh, hi, congratulations. On a good set of quarters. I have a couple of questions. Uh, first question, question is on the volume growth side, like how would, uh, how would be the volume for this quarter? Across the geographies. Yeah, so, so see, our entire growth— so if you see the, the first half of the current year, our revenue has grown by 32.9%. Um, the volume, the volume will be strong. It depends from where, what volume are you talking? Are you talking from the Indian point of view or are you talking from the global point of view? Volume should be strong, uh, from all angles. But again, I think seasonality— we are waiting for a strong winter and we are hoping for that. But the 3rd quarter is, is normally, uh, the stronger quarter for all, for us. So we are hoping That will see good volumes. Good, good. So see the entire And a substantial part of this has come through volume growth only. Okay, okay, got it. And could you please give the mix between Rx and OTC for this quarter and H1? Um, Jitendra? Yeah, it was, uh, broadly, uh, very much similar. I think, uh, between 70 to 75, around 75% OTC and, uh, the 25% will be Rx. Okay, okay, got it, got it. Thank you so much. Thank you. Thank you. The next question comes from the line of Sandeep from MoneyGrow Assets. Please go ahead. Yeah, uh, good evening. Uh, thanks for the opportunity. So given the substantial cash balance on the books, is management considering, uh, any kind of share buyback program or any acquisition? So I just want to know more about the capital allocation. Thank you. Yeah, um, so we have, uh, we are allocating a decent amount of, uh, capital, uh, with, uh, on, on 2 fronts. One is obviously CapEx, and the second one is Uh, M&As. So we have been in dialogue with companies and we have— we continue to be in dialogue with companies. So we are looking at our growth, uh, growth being fueled in Europe. So we do look at a couple of more M&As that may come across in Europe, but again, the size may differ. Some may be small, some may be larger in size, but we, we look for opportunities to grow, and that's where the funds are kept so that we can consummate those M&As. But till then, we are, you know, now looking at, you know, acquiring facilities in India which, you know, we would probably need a decent amount of cash to be plowed out there on those fronts. Buyback is always an option, and we, we are— we have discussed on this, and we, we will continue evaluating as and when we feel if nothing else is happening, that could be a possibility also. Okay, thank you. That's it then. Thank you. A reminder to all the participants that you may press star and 1 to ask a question. The next question comes from the line of Harshal from Ask Wealth Advisors. Please go ahead. Uh, congratulations on a good set of numbers, sir, and thanks for the opportunity. Uh, so actually in the initial part I missed your comments on the US market, so I just wanted to know, uh, how should we look at the US markets, especially Uh, in the context that we bought a mid-single-digit price erosion, uh, going around, which I believe, uh, you know, uh, could be the case going ahead also, but Overall, with respect to growth prospects outlook, how should it be for the second half and probably FY28 as we go in? Do we have any launches Uh, like any number of launches lined up, and maybe any comment, uh, on this from your side would be helpful. We have about, uh, you know, we are filing, uh, every year we are filing NDAs. We have about, uh, I'm hoping within the next, uh, within this next year, uh, within the next couple of months, uh, till March, we should be filing another 5 or 6 NDAs. So this is a This is an nonstop process, right? So we continue to go down that road. We are increasing our product portfolio, um, uh, in all directions. Um, we have quite optimistic on the US market. I know geopolitically it was a bit of a— it was a bit in a mess from all that was created, but there is some silver lining. So we are hoping for good news, we are hoping for corrective actions to be taken. You know, the elections, the midterm elections, this was concluded. So, uh, I'm quite confident that, uh, you know, the US market will still be a growth driver. I, I don't think we have to evaluate it on a quarter-on-quarter basis. I think we have to look at it from a medium-term to long-term because a lot of investments are going in terms of filings. So if you ask me my visibility for the next 3 years, I think we are still, uh, we are still moving towards a $300 million order book status within the next 3 years. Okay, so, uh, you're trying to say a $300 million order book kind of over the next 2 to 3 or 2 years? Is that, uh, correct if I have heard it correct? Yeah, 3 years. Within the next 3 years, I, I do believe our order book will increase from $225 to $300 crores. Okay, okay. And so, right, so it will be from 225 to 300. Okay, okay, okay. Uh, that's there. And, uh, so I just also, uh, wanted to, uh, have your, uh, this thing, uh, onto the— to the raw ROW markets wherein, uh, you know, the geopolitical issues and all, uh, are there. You did allude to in your initial comments also that you're monitoring the situation, but, uh, Is there any, uh, any view that you would want to share, like the run rate should be as it is in first half, or any meaningful or any slight improvements you would be envisaging over there? I, I see improvement. Uh, I still see us, um, you know, doing quite well for, uh, the emerging markets. Uh, the first half was a bit of a struggle because You know, it affected, uh, it affected transportation, it affected, uh, you know, vessels were not— obviously were all stuck in the Red Seas and everything. There was chaos, uh, related to, uh, logistics and supply chain. I think that is slowly easing up, and I do see a better movement happening even in the— in this month, in the last month. So, uh, so I do see us making up for some lost ground. Obviously we can't make up for 6 months, but we are making up for lost ground, uh, and I do believe that we'll be on track, uh, hopefully by the end of this year and, uh, come back to what we had envisaged for these markets. We still are focusing on, you know, our filings, our product registration in these markets. So from, from our outlook, um, I mean, these are small, uh, small bumps that one has to overcome in because of situations which are beyond our control. But I think we, we don't look at it in quarters like I mentioned. We look at it more from a long-term point of view. Got your point. So, sir, uh, about, uh, 25-odd crores run rate per quarter is something that we could expect towards the exit of FY27 for the ROW markets? Safe to say that or no? Uh, it's difficult looking at— again, I— we are all hoping for a better— if you had asked me this question maybe a quarter back, I, I never thought the war would last this long. I was hoping that the war would, uh, war would be over before the election because of the pressure of the election, but who knows, it didn't, it didn't happen. So yeah, I don't have a crystal ball to predict on geopolitical scenarios. But if things ease up, um, then, um, then I would say, yeah, I mean, very close to 25 crores, maybe 20 to 25 crores is doable. Right. Okay, so, uh, thank you and all the best. If there's anything, I'll come up for a follow-up. Thank you. Thank you. Thank you. The next question comes from the line of Mihir Damania from Fident AMC. Please go ahead. Uh, hi, thanks for taking my question. So my first question is, you alluded that you are looking at manufacturing assets in India. I wanted to get a bit more color on what exactly you are kind of looking at. So historically we've been very strong in, uh, oral solids. So are we looking at similar assets which can give us a lot more capacity, or are we looking at different modalities like probably going into injectables or maybe a backward integration kind of an asset which can help us control costs better. Uh, just wanted a bit more color because you alluded that this might require a substantial amount of investment versus all your— for your other acquisitions in the past? Yeah, I mean, for us presently, uh, whatever, um, we are looking at different dosage forms, not injectables, but, um, but we are looking at expanding dosage forms where we believe we would foresee some constraints in terms of capacity maybe 2 years down the line. And tablets and solid oral— sorry, solid oral could be a part of it also. Definitely. Whatever we do, there is always solid oral around it. So, but yeah, we are looking right now at expanding manufacturing capabilities. Nothing on backward integration, we're not looking at APIs. Backward integration as on date, looking at what's happening globally, we have just— we're not getting into that right now. Got it. And my second question was on the depreciation, but I just wanted to get a bit more colors because sequentially there has been almost like a 6-7 crore depreciation. increase while your gross block hasn't been. So I understand that it's because of some intangible accounting, but I wanted to understand whether this is the run rate to kind of take forward, because on 100 million— or sorry, 100 crore kind of an equation, a 6 crore quarterly depreciation increase seems slightly high. So if we get a bit more color of what depreciation we can kind of expect going ahead, that would be very helpful. Yeah, Mihir, so we have changed our accounting treatment for depreciation on intangible assets from this quarter. And earlier, like, you know, we were just testing it for impairment. And we were taking indefinite useful life for, like, you know, for arriving at the impairment decision. So from this quarter, we basically are taking intangible asset as finite useful life, and we have started depreciating it over a period of 10 years. And the reason for increase in this figure was, you know, we have also started providing for depreciation on acquired intangible assets from CliniqueU and ABC Now. So this impact has come largely from the acquired intangible assets also during this year. Uh, so fair to assume that this will be the, uh, going, uh, run rate for the next couple of quarters? Or— yes, yes, perfect. Thank you. Yeah, thank you. Thank you. A reminder to all the participants that you may press star and 1 to ask a question. The next question comes from the line of Akshat Shetty. From Manjit Kothari Family Office. Please go ahead. Hello, am I audible? Yes. Yeah. Congratulations on the strong performance and thank you for taking my question. Uh, my first question is on, uh, US OTC. Uh, in the 2nd quarter of FY27 presentation, you mentioned your ambition to double US store brand OTC revenue supported by an expanding product pipeline. And one interesting industry trend is that US store brands are increasingly competing on product quality and innovation rather than just price. So in this changing environment, how is Marksans strengthening its position, uh, position with large retailers beyond being a cost-competitive manufacturer? So do you see opportunity to become a strategic product development and a supply chain partner for these retailers? Uh, yes, Akshat, we, we are, and we are already in some of the retailers. We already positioned there where we talk of launching first to market, or we talk of innovations. So we always have dialogues with them on innovations, and quite a few of our retailers, we, uh, we look at us for those directions. Okay, got it. Uh, I have one more question regarding the European region. Uh, in this, uh, same presentation, you highlighted the contribution from Fueling Q in the Netherlands and the consolidation of APC now in Germany. So with this expanded European presence Could you explain how you plan to use this local distribution platform to introduce Marksans, uh, existing product and future launches across multiple Europe European markets? And do you see this creating a meaningful new growth channel beyond the existing UK business over, say, next 3 to 5 years? Yes, the answer in one word is yes, number one. Number two is these, these companies of ours are more Uh, and centric on the country or the geography that we've acquired them on. So when you talk of Clinique, it is Netherlands. You talk of ABC, it's Germany. So these markets does not represent the whole of Europe, but it does represent that country. And that's where our inorganic growth strategies of M&As will continue in other countries in Europe. But they will add significant growth both tangibly and intangibly in what we do in Europe as well as what we do in that particular country. And both countries are quite potential, and Germany is a big market also. Okay, got it, got it. Thank you for answering my both questions. Yeah, thank you. Thank you. A reminder to all the participants that you may press star and 1 to ask a question. The next question comes from the line of Pranav Gupta from Value Advisors. Please go ahead. Hi, thanks for the opportunity. I have a couple of questions. Firstly, uh, Australia grew 64% year on year. Just wanted to understand how much of it came from the Nova division. And how do we see the next few quarters shaping up? Well, Australia 100% comes from Nova. We don't, uh, we don't market anywhere else. So Nova is a subsidiary and we market, uh, it's a front end, so we all, we market all our products, uh, through them. And we see Australia growing over the next 3 years to a $100 million subsidiary. Noted. Uh, and just to follow up, like, is our Europe target of the top line of about ₹1,000 crores in 5 years still valid? Yes. All right. Thank you. Thank you. The next question comes from the line of Tanvi from Mira Capital. Please go ahead. Hi, um, am I audible? Yes. Uh, firstly, congratulations on a great set of numbers, sir. Uh, I have a couple of questions. Um, firstly, I wanted to know, is the ₹4,000 crore revenue target in about 2 years still on track? I think next year we should touch ₹4,000 crores. So, uh, so I mean, we are trending, uh, we are trending right now very close to ₹1,000 crores a quarter. So I think very comfortably we can say that next year we will hit ₹4,000 crores. Okay, thank you. Um, secondly, I wanted to ask, since the UK market has grew significantly after a flat of— flat year of FY26, Um, is it sustainable? Uh, yes, it is sustainable. And because of the product pipelines, uh, and we can see visibility on approvals coming in, I do believe it is sustainable. So it will show growth. Uh, it's, uh, I mean, it's not overnight going to double its revenue, but it will grow significantly well. Okay, thank you. Um, lastly, I just wanted to ask, what is the dividend policy for FY27 given the net cash position currently? Uh, we, we have to now evaluate that. We had, we had a lot of things on our, on our plate right now. So historically, like, you know, one-third of our free cash flow generation we have been distributing as dividend. So broadly, it will be in line with that. Okay, okay. Thank you so much. Thank you so much for taking my questions. Thank you. A reminder to all the participants that you may press star and 1 to ask a question. The next question comes from the line of, uh, Arun from Unifi Capital. Please go ahead. peaked or started to cool, or are they still elevated? And given Q2 gross margins of 58.5%, uh, what, what should be the margin that we should expect for Q3 and Q4? Closer to 58% or to the usual guidance of 55 to 56%? Thanks for the opportunity again, sir. A question on API costs. So we have been seeing reports of API prices, especially paracetamol and ibuprofen, being at elevated levels. So have prices I'll probably maintain it at 55-56%. Again, um, I mean, these things can change very rapidly if, you know, the crude prices come down. You will see it going down if the war goes from bad to worse, then obviously, you know, everything is out of all projections. go for a toss. But we are quite optimistic on the outlook, and this is very prevalent to what's happening in the midterm elections. So we do see things cooling down a bit, and if you've seen the last couple of days, the crude has improved a bit. So I do see that prices should cool down maybe in the next 30 days or so. Got it, sir. And as prices fall, uh, would it quickly reach a gross margin, or, uh, the retailers would ask for price cuts? How does it, uh, how does it usually happen, sir? Retailers will not ask for a price cut, but our gross margin will increase obviously, or will come back to its historic numbers. If, if we see prices, raw material prices coming down, obviously raw material prices go up, you know, then like I said, everything You know, all calculations have to be— everything has to be recalculated. But we are looking at it more from a positive angle, uh, and we are working towards, uh, achieving our objectives because we know this is literally a short-term— it it's not sustainable. And, uh, I mean, I was— like I said then earlier in the call, that I was, I was actually hoping that the war would have ended before the midterm elections. It didn't, but You know, I had a strong feeling that it should have for whatever political reasons. But that said and done, we are still hoping that it will end soon. Yeah, we have, we have taken a new lease in UK and it has come from that geography. Okay, got it. Yeah, thank you. Thank you. Thank you. Thank you. Got it, sir. And one, one last question. I see that our lease liabilities have gone up by ₹120 crore. Is it, is it due to consolidations of the acquisition, or we have taken a new lease? Uh, can you Our next question comes from the line of Mr. Vishal Manchanda from Institutional Equities Limited. Thank you, please go ahead. Mr. Manchanda, please go ahead. Mr. Manchanda, please can you go ahead and unmute yourself? Sorry, I was on mute. Uh, so I wanted to understand if you can break up your organic growth between existing products and new launches for the year. And also, if you have seen any price increase or decrease in our base portfolio. So, uh, Vishal, it just depends on geographies. Again, if you look at US, uh, substantial amount of our growth will come from organic only, um, and a small portion will come from inorganic. But if you look at UK, a decent amount will come from new launches, and obviously in Europe, substantial amount will come again from new launches. So Australia will also be fueled by new launches that would come. This is over and above Uh, over and above what we are doing. So we are, we are at a decent size, we are at a decent pace. So definitely, uh, in our strategy to hit new heights, new launches play a very important role. if it is 20% of the growth that comes from new launches, 10%, some broad indication? In UK, in UK it would probably be 20%, uh, but in Europe it'll probably be higher, maybe 50-60%. Uh, in US it'll probably be 10%. But generally, if you could, uh, kind of give an indication as to what percentage of the growth usually, uh, is the new launches, uh, that contribute, like And the focus area for your new launches is oral dosages, or you— oral solid dosage, or you are trying to kind of get into new dosage forms? It is quite diversified, but we are not into injectables, so that is not the case. But as on today, the maximum portfolio is obviously oral dosage as we speak. But we are diversifying slowly, but irrespective of the diversity that we are planning, uh, it will still be the largest segment for us. Okay, and, uh, are we witnessing any price increases in our base portfolio? Are you talking on finished product or, uh, the finished product? The finished products. We know we are not, we are not witnessing any of it. And any changes in competitive intensity? So are kind of— are you seeing the competitive intensity coming down? Your competitors, maybe they're facing cost challenges, and you are probably seeing competition coming down over years. Um, yes, uh, we, we do see that, but, uh, every time we see, uh, you know, something coming down, something goes up, right? So, um, we don't actually— we don't pay a lot of attention to all that because we, we basically grow on our strength and on our strategy. So we've been growing very strategically in our portfolio as well as in our geographies that we played. We've planned out, and we're seeing good results in what we are doing. So, but, you know, it's the nature of the beast. You'll always have competition. So if you start looking at who's doing what, we tend to get bogged down on that. But we do pay, uh, we, when we are picking our product selections on what we have to do, then we obviously do our research as to see how many players are into that market. But beyond that, we don't, uh, you know, bother what companies— basically on competition. And with respect to our R&D efforts, have we identified any focus area, or we are targeting products— we are just kind of trying to target products where we don't have a presence in? Is that the way we're looking at new launches or specific areas you would have identified? Yeah, R&D is focused mainly on new, new niche molecules, let me put it this way. And, uh, and as we grow, we get into a bit more complex molecules which may involve para-4 challenges or first-to-market type of strategies. But this is all a part and parcel of us evolving to more prominent players in those markets. So R&D focus today is going into all development of niche molecules. molecules where number of competitors, like you say, or players are less, or molecules which have more complexity in formulation. That's our focus point right now. But is this largely focused around oral solids, or you have kind of, uh, put a team around it? It's on liquids, it's on various other segments also. Sorry. It's on topicals, liquids, it's on various other segments also. Got it. All right. And all your revenues that you do is— comes from your own manufacturing, or there is also a portion of contract manufacturing that you rely on? No, I mean, obviously we have plants all over, you know, in the US and UK and in India. Most of it, I would say 98% of it or 99% of it comes from from our own plants. nose. Okay, so I think you highlighted in your presentation a few nasal sprays you launched in Australia. I think one nasal spray or 2 nasal sprays. So are these in-house manufactured or these are outsourced? No, they're not in-house but will soon be in-house, but as of today they are not in-house. again, it would be more oral solids related manufacturing capacities. There are different dosage forms we are looking based on what we believe our capacity would basically fill up and fill up fast. But irrespective, whatever dosage forms we do get into, we will always ensure there is a solid oral block in, in and around that place. Because, uh, because at the end of the day, no dosage form comes close to the solid oral dosage forms. Okay, and with respect to the kind of— you are also looking to acquire manufacturing assets. So would this be any specific dosage form that you would be looking at, or Understood. And you highlighted like probably you are seeing some capacity constraints around oral solids. Did I interpret that correctly, or that's not— no, uh, so far we are good for the next 2 years, uh, 2 to 3 years, but, uh, you know, you always want additional capacity. Okay, sir. Thank you, thank you. That's all from my side. Thank you. The next question comes from the line of Harshal from Ask Wealth Advisors. Please go ahead. 27. There's always a possibility, but for that you've got to, uh, you've got to, uh, call the president and call off the war. Okay, okay, okay. It's as simple as that. Okay, okay, got it, got it, got it. Thank you. Okay, thank you. Uh, thanks for the follow-up, sir. Uh, so just missed out on one point, actually wanted to have your views. So, uh, on the margins front, uh, we've done a good, uh, 23% in, uh, Q2. And, uh, you know, uh, towards the end of full year, we had guided somewhere around 21% or something, but Uh, sir, is there a possibility that we could, uh, kind of, you know, have something higher than 21? Thank you, ladies and gentlemen. As there are no further questions, we have reached the end of question and answer session and now hand the conference over to management for closing comments. Uh, thank you everyone for, uh, you know, sparing your time, valuable time, and attending this conference call. Uh, want to wish you a good evening and be safe. Thank you very much. Thank you. On behalf of Marksans Pharma and Systematix Institutional Equities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.